Former Air Force base transitioning into aerospace industrial park

Updated 12:34 pm, Thursday, July 14, 2011

Gore Design Completions Ltd. is pictured at 607 N. Frank Luke Drive at Port San Antonio on July 8, 2011.

Gore Design Completions Ltd. is pictured at 607 N. Frank Luke Drive at Port San Antonio on July 8, 2011.

Photo: ANDREW BUCKLEY, Express-News

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A worker hangs 10-year banners along General Hudnell Drive near Port San Antonio on July 8, 2011. The banners mark the decade since Kelly AFB closed.

A worker hangs 10-year banners along General Hudnell Drive near Port San Antonio on July 8, 2011. The banners mark the decade since Kelly AFB closed.

Photo: ANDREW BUCKLEY, Express-News

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A C-17 airplane is seen Friday July 1, 2011 in this aerial picture as it undergoes maintenance at the former Kelly Air Force Base in San Antonio, Texas.

A C-17 airplane is seen Friday July 1, 2011 in this aerial picture as it undergoes maintenance at the former Kelly Air Force Base in San Antonio, Texas.

Photo: WILLIAM LUTHER, Express-News

Former Air Force base transitioning into aerospace industrial park

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It's only in hindsight that anyone can see how an event in Berlin in 1989 continues to ripple through the San Antonio business landscape.

The fall of the Berlin Wall triggered a series of events that led to the closure of Kelly AFB 10 years ago. Yet, by seizing unexpected opportunities and with careful planning, the 1,900-acre Port San Antonio was created in its place.

The port celebrates its 10-year anniversary with an invitation-only event Wednesday evening.

Port San Antonio is the largest real estate holding in the city. It stands as one of the city's largest economic engines and has the potential for an even larger role.

With more than 14,000 workers at the industrial park, the port in 2010 had an estimated economic impact last year of about $4.23 billion, most of it direct. Companies located there paid about $477 million in state, local and federal taxes last year.

Combined, the port's approximately 80 tenants would rank among the city's largest employers, but not the largest.

San Antonio business leaders shuddered after the Berlin Wall fell and the Soviet Union collapsed — both signaling the end of the Cold War.

They openly feared what a “breakout of world peace” would mean for a local economy that had enjoyed a run-up in military spending during President Ronald Reagan's administration.

The concern was warranted. Soon, there were rounds of base closures to reduce the military budget.

“We knew,” as 1995 approached, said Joe Krier, then-president of the Greater San Antonio Chamber of Commerce, “that the days of depending on ever-growing military budgets weren't going to continue. (But) we anticipated that Brooks AFB was going to close, not Kelly. Kelly was ranked No. 1 in efficiency, but it also ranked No. 1 in labor complaints, so that was a concern.”

On June 22, 1995, time seemed to stand still when the worst possible scenario happened. Despite vigorous citywide lobbying to save Kelly AFB, base-closing commissioners voted to close the base's Air Logistics Center and realign the rest of the installation. It felt like a battle lost.

“They pulled Kelly out of the bag and killed it,” said Bexar County Judge Nelson Wolff, who was mayor until about two months before the base-closing vote. “It was a shock to a lot of people.”

The handoff

Mayor Bill Thornton, elected only two months before the base-closure vote, recalled the shock of the decision that Thursday at City Hall. He said he immediately appointed the leaders of the base-conversion planning committee, which became the Initial Base Adjustment Strategic Committee.

“We needed to show the vision for the future already existed,” Thornton said. “Kelly was important at so many levels. We saw the Kelly resources that we couldn't replicate: the runway, the hangars and the warehouses.”

On July 18, 1995, when Thornton and several business leaders were in Washington to confer with top-level Air Force brass, the city team suddenly was invited to the White House by San Antonian José Villarreal, who had been on President Bill Clinton's transition team in 1992.

Villarreal steered the city officials into the office of Clinton Chief of Staff Leon Panetta and they soon were joined by Clinton, who sat next to Thornton.

“It was amazing to watch him pull all of the facts he knew about what was happening with San Antonio and Kelly. He got it,” Thornton recalled. “I asked him to give us the time and to give us the resources. ... His nod of approval changed how that transition occurred.”

“The saving grace was Clinton adding five years to the transition period,” Wolff said. “It gave us time to plan and think everything out. It was a great decision on the president's part.”

Within months, Lockheed Martin Corp. and the Boeing Co. announced they would open maintenance, repair and overhaul centers at Kelly's hangars. The availability of a skilled workforce was too enticing for the giant aerospace firms to ignore.

Transferring a military base from military to community control was the main task of the initial Greater Kelly Development Corp., headed by Paul Roberson, an ex-Air Force officer who had been active on the city's team trying to prevent Kelly AFB's closure.

KellyUSA is born

In November 1999, the Greater Kelly Development Corp. was upgraded to the Greater Kelly Development Authority, with more powers, and it began marketing KellyUSA as an industrial park.

The joint use of Kelly AFB's long runway initially was going to take months. It actually took six years, ending about the time the Air Force officially closed Kelly AFB on July 13, 2001.

Mark Frye, a consultant who was assigned to assist the process, recalled Roberson's constant 12-hour days seeking new commercial tenants and jobs.

“I am going to try to say this without breaking up,” Frye said. “Paul became a good friend. Paul Roberson was the right man for the job at the right time. His demeanor and his skills allowed him to work with Air Force officials and to be connected with the local and Washington political scenes.”

Roberson retired from the Greater Kelly Development Authority in 2001 and died of cancer in September 2003 at age 64. A Port San Antonio office building bears his name today.

Rickenbacker, also an Air Force conversion, served as a model for Kelly.

Under Miller, the redevelopment agency continued the work of tearing down dilapidated buildings as they became available and building new commercial-ready facilities, mainly financed by existing lease revenues.

The industrial park changed its name to Port San Antonio from KellyUSA in early 2006.

Range of tenants

Throughout much of the past decade, Port San Antonio has been leased to capacity or near capacity. The base became a foreign trade zone, offering tax advantages to freight stored and serviced at the park. Customs services were added to attract more air freight. A railport at the East Kelly end of the industrial park was built, along with warehouses, to become a distribution center.

A town center with retail and recreation is in a concept stage, an effort to open the industrial park to the community after decades of Air Force restrictions keeping the public out.

A few years ago, the Air Force, which formally left Kelly in 2001, began coming back in a big way. Port San Antonio's 452,000-square-foot Building 171 is the main reason. Building 171 is finishing a $100 million remodeling job and is due, by the end of 2011, to be home to a dozen or so Air Force commands and about 2,400 workers.

One of those is the Air Force's cyber command, the 24th Air Force and its associated 624th Operations Center. The 24th Air Force is listed as belonging to Lackland AFB because that's where its telecommunications network is.

When Building 171 is completely full, the Air Force will employ close to 7,000 Air Force personnel at the port overall, nearly half of the park's total employment.

Miller has said he thinks thousands more could come. Port executives have identified 45 acres at the current Lindbergh Park, adjacent to Building 171, to build a series of office buildings totaling 1 million square feet of space for additional military agencies and contracts.

Aviation central

But Port San Antonio, first and foremost, is an aerospace industrial park. Eighty percent of its revenues come from 14 aerospace tenants.

“Aerospace is our biggest asset going,” Miller said. “We have a really good workforce here,” assisted by training at Alamo Colleges' St. Philip's Southwest Campus and the industry-driven Alamo Area Aerospace Academy, a high school-to-career program supported by Alamo Colleges.

“It's worked out great for us,” Gore Design President Kathy Gore-Walters said. “We were having a difficult time at San Antonio International. ... We had signed some contracts, and we needed our own hangar.”

A landmark achievement occurred in March when Boeing welcomed the first of several 787 Dreamliner aircraft for post-production assembly work before delivery to customer airlines.

“Locally, we know what we have,” said Jim Perschbach, a lawyer who heads the Greater San Antonio Chamber of Commerce's Aerospace Committee. “The 787 work here gives the rest of the world the validation it needs that we know how to work on the world-class projects. We need to sell this.”

One of the opportunities San Antonio should pursue is the reconfiguration work of aging wide-body airlines into freighters, Perschbach said.

But to obtain work on this scale will require doubling or tripling the size of the city's aerospace workforce and hangar facilities, Perschbach pointed out.

Miller concurs. He said he wants to see the 80 percent of port revenues from aerospace grow, not decrease. A taxiway extension is planned that would open 150 acres to aircraft production.

“Our mission has always been good-paying jobs and redevelopment to the highest and best use,” Miller said.

Thornton, instrumental in starting the transition, is impressed today with Port San Antonio.

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“It's there. We have a workforce. It is strategically placed for any company to serve North America or, literally, the world,” Thornton said.